"Part of Rupert Murdoch's News Corporation empire employed computer hacking to undermine the business of its chief TV rival in Britain, according to evidence due to be broadcast by BBC1's Panorama programme on Monday .

The allegations stem from apparently incriminating emails the programme-makers have obtained, and on-screen descriptions for the first time from two of the people said to be involved, a German hacker and the operator of a pirate website secretly controlled by a Murdoch company.

The witnesses allege a software company NDS, owned by News Corp, cracked the smart card codes of rival company ONdigital. ONdigital, owned by the ITV companies Granada and Carlton, eventually went under amid a welter of counterfeiting by pirates, leaving the immensely lucrative pay-TV field clear for Sky.

The allegations, if proved, cast further doubt on whether News Corp meets the "fit and proper" test required to run a broadcaster in Britain. It emerged earlier this month that broadcasting regulator Ofcom has set up a unit called Project Apple to establish whether BSkyB, 39.1% owned by News Corp, meets the test.

Panorama's emails appear to state that ONdigital's secret codes were first cracked by NDS, and then subsequently publicised by the pirate website, called The House of Ill Compute  THOIC for short. According to the programme, the codes were passed to NDS's head of UK security, Ray Adams, a former police officer. NDS made smart cards for Sky. NDS was jointly funded by Sky, which says it never ran NDS.

Lee Gibling, operator of THOIC, says that behind the scenes, he was being paid up to £60,000 a year by Adams, and NDS handed over thousands more to supply him with computer equipment.

He says Adams sent him the ONdigital codes so that other pirates could use them to manufacture thousands of counterfeit smart cards, giving viewers illicit free access to ONdigital, then Sky's chief business rival.

Gibling says he and another NDS employee later destroyed much of the computer evidence with a sledgehammer. After that NDS continued to send him money, he says, until the end of 2008, when he was given a severance payment of £15,000 with a confidentiality clause attached. An expert hacker, Oliver Koermmerling, who cracked the codes in the first place, says on the programme that he, like Gibling, had been recruited on NDS's behalf by Adams.

The potentially seismic nature of these pay-TV allegations was underlined over the weekend, when News Corp's lawyers, Allen & Overy, sought to derail the programme in advance by sending round denials and legal threats to other media organisations. They said any forthcoming BBC allegations that NDS "has been involved in illegal activities designed to cause the collapse of a business rival" would be false and libellous, and demanded they not be repeated.

On the programme, former Labour minister Tom Watson, who has been prominent in pursuit of Murdoch over the separate News of the World phone-hacking scandals, predicts that Ofcom could not conceivably regard the Murdochs as "fit and proper" to take full control of Sky, if the allegations were correct.

James Murdoch, who is deputy chief operating officer of News Corp and chairman of BSkyB, was a non-executive director of NDS when ONdigital was hacked. There is no evidence, the BBC says, that he knew about the events alleged by Panorama.

Gibling told the programme: "There was a meeting that took place in a hotel and Mr Adams, myself and other NDS representatives were there and it became very clear there was a hack going on."

He claimed: "They delivered the actual software to be able to do this, with prior instructions that it should go to the widest possible community software [intended] to be able to activate ONdigital cards. So giving a full channel line-up without payment."

Gibling says that when fellow pirates found out in 2002 that he was being secretly funded by NDS, THOIC was hastily closed down and he was told by Adams's security unit to make himself scarce.

"We sledgehammered all the hard drives." He says he was told to go into hiding abroad.

Kommerling says he was recruited by Adams in 1996. "He looked at me and said 'Could you imagine working for us?'"

Kommerling was told the NDS marketing department were "looking into the competitors' products" and he cracked the codes for the system used by ONdigital, which came from the French broadcaster Canal Plus.

Later he recognised the codes cracked by his own NDS team, when they got out on to the internet. They appeared on a Canadian pirate site with an identical timestamp: "The timestamp was like a fingerprint," he says.

NDS published its own response to the programme's allegations before transmission, saying: "It is simply not true that NDS used the THOIC website to sabotage the commercial interests of ONdigital/ITV digital or indeed any rival."

NDS admits Gibling was in its pay, but says it was using THOIC as a legitimate undercover device. "NDS paid Lee Gibling for his expertise so information from THOIC could be used to trap and catch hackers and pirates," NDS said.

The company does not dispute the allegations that it got its own hands on ONdigital's secret codes, which was not itself illegal, and that the material was passed on to Adams, its security chief. But NDS says there is an innocent explanation "as part of the fight against pay-TV piracy".

According to NDS: "All companies in the conditional access industry come to possess codes that could enable hackers to access services for free." This is for the purpose of "research and analysis". They claim that it was part of Adams' job to "liaise with other pay-TV providers" and therefore "it was right and proper for Mr Adams to have knowledge of codes that could be used by hackers".

The company added: "NDS has never authorised or condoned the posting of any code belonging to any competitor on any website." Adams has denied he ever had the codes.

In 2002 Canal Plus, which supplied ONdigital with its smart card system, sued NDS in a US Court, alleging that NDS had hacked its codes. But no evidence about a link to ONdigital emerged: the case was dropped following a business deal under which Murdoch agreed to purchase some of Canal Plus's assets.

Wow. This could be dynamite for News Corp's future in British broadcasting! I wonder just how much of this will actually stand up to proper scrutiny other than just a current affairs program, allbeit one with quite a track record for exposing some quite high profile stuff.

Wow. This could be dynamite for News Corp's future in British broadcasting! I wonder just how much of this will actually stand up to proper scrutiny other than just a current affairs program, allbeit one with quite a track record for exposing some quite high profile stuff.

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I was thinking that too - however, the Beeb were not their usual ambigious self. None of this "allegedly" stuff - they've gone right for the jugular, saying "this is what happened", so they must be pretty confident if it all goes to the courts.

Lee Gibling to me did not come across as a credible witness, as for his association with NDS, I would imagine they were more interested in who was cloning Sky cards as that was also rife at the time, hence employing him as a poacher turned gamekeeper along with his website. As for hacking competitors cards, well all companies are trying to gain commercial secrets from competitors. Will it damage Murdoch, just another story as its open season on him and News Corp.

As for OnDigital, as far as I remember it was just Freeview with a few league one games, they did a deal with the Football league they could not afford, thats what killed the company.

The allegations made last night have been known about within satellite enthusiast circles for a long time. It is also well known that if anything is written about a hack of skys encryptions system, you are chased down ruthlessly by them.

The specific details about the various hacks of different encryption systems was not detailed last night, however there are some very specific details on the internet, including the lab used, the way things were reverse engineered and those that initially disseminated the data. For those not in the now, the encryption hardware (chips) were disassembled at the molecular level something beyond the 'average' hacker.

Murdoch's starting to flap; This threatens the financial cash cow of his empire-
But apparently its the ' Old Toffs 'and 'Right wingers' are the enemy who are doing it to him. Nothing to do with self-inflicted mass criminality at the News of the World? And 'Right wingers' are his enemy? Does this make Rupe a (Gasp!) Lefty Liberal? Shouldn't he buy the Guardian? Oh, yes. It was the lefties there who torpedoed his outfit at Wapping wasn't it?

(Reuters) - An angry Rupert Murdoch on Thursday declared war against "enemies" who have accused his pay-TV operation of sabotaging its rivals, denouncing them as "toffs and right wingers" stuck in the last century.
Separate reports by the British Broadcasting Corporation and the Australian Financial Review newspaper this week said that News Corp's pay-TV smartcard security unit, NDS, had promoted piracy attacks on rivals, including in the United States.
NDS and News Corp had already denied the allegations, but on Thursday the media conglomerate mounted a concerted fight back as a corruption scandal that has plagued its British newspapers began to encroach on its far more lucrative pay-TV business.
"Seems every competitor and enemy piling on with lies and libels. So bad, easy to hit back hard, which preparing," News Corp Chief Executive Murdoch, 81, tweeted.
News Corp, whose global media interests stretch from movies to newspapers that can make or break political careers, has endured an onslaught of negative press since a phone-hacking scandal at its News of the World tabloid blew up last year.
At its height last July, Murdoch told British parliamentarians: "This is the humblest day of my life," after meeting the family of a murdered schoolgirl whose phone News of the World journalists had hacked.
On Thursday, it appeared that Murdoch had had enough of apologising. "Enemies many different agendas, but worst old toffs and right wingers who still want last century's status quo with their monopolies," he tweeted.
For an avowed republican such as Murdoch, describing someone as a rich and upper class "toff" is a damning insult.
The BBC has a long history of ideological clashes with BSkyB, which is 39 percent owned by News Corp, and both Rupert and his son James Murdoch have publicly attacked the British public service broadcaster over the years.
The Australian Financial Review is owned by Fairfax Media, the main rival to Murdoch's News Ltd newspaper group in Australia.
"INACCURATE CLAIMS"
James Murdoch sits on the board of NDS, which News Corp and co-owner private equity firm Permira agreed to sell for $5 billion (3 billion pounds) (3 billion pounds) to Cisco this month. He is also non-executive chairman and former CEO of BSkyB.
The younger Murdoch has been criticised for not uncovering the scale of phone-hacking at the News of the World, though he had not yet joined the UK newspaper operation when the hacking took place.
He has since moved to New York after being promoted within News Corp to deputy chief operating officer, and has severed all ties with the British newspapers. His focus is now the company's international pay-TV operations, where he made his career.
Chase Carey, News Corp's COO and James Murdoch's immediate boss, issued a statement late on Wednesday in which he condemned both the BBC Panorama documentary and other media worldwide who had reported its claims.
"The BBC's Panorama program was a gross misrepresentation of NDS's role as a high quality and leading provider of technology and services to the pay-TV industry, as are many of the other press accounts that have piled on - if not exaggerated - the BBC's inaccurate claims," he wrote.
NDS has complained that it was not asked for its side of the story before Monday's Panorama, which claimed NDS had leaked secret codes that allowed rampant pirating of BSkyB rival ITV Digital, which went bust in 2002.
On Thursday, NDS's Executive Chairman Abe Peled published a detailed letter to Panorama accusing the documentary of using manipulated emails to support its allegations, and demanding that the programme retract the claims.
The BBC said: "We stand by the Panorama investigation. We have received NDS's correspondence and are aware of News Corp's rejection of Panorama's revelations. However, the emails shown in the programme were not manipulated, as NDS claims, and nothing in the correspondence undermines the evidence presented in the programme."
Also this week, the Australian Financial Review published a story claiming that NDS had allowed piracy to thrive at its client U.S. satellite broadcaster DirecTV, which Murdoch had ambitions to buy, even though it had a fix.
It reported that NDS ran a secret unit in the mid-1990s to sabotage its competitors. The stories were the result of a four-year investigation by investigative reporter Neil Chenoweth, who has written two books about Murdoch.
The AFR's Editor-in-Chief Michael Stutchbury told Reuters on Thursday: "We fully stand by our reports in the paper and by Neil Chenoweth's extraordinary investigation."
"We are not motivated in any way by any desire to damage any financial rival to the company that runs the Financial Review. We are simply following the story and publishing what we have uncovered," he said.
None of the evidence presented by Panorama and the AFR this week suggests that the Murdochs or any other News Corp executives were aware at the alleged practices at NDS.
NDS has won several court cases brought by rivals accusing it of promoting piracy, while others have been dropped - in one case because News Corp bought a subsidiary from the rival, Vivendi, which at the time was struggling with debt.
News Corp made $3.8 billion (2.3 billion pounds) in revenues and $232 million in operating profit from satellite TV in its last fiscal year. It does not detail financial results for its newspapers but its UK titles bring in less than 3 percent of group profit.